Posted: February 28th, 2023

Chapter 8_Aggregate Planning in the Supply Chain_Pages 222-223

• Chapter 8_Aggregate Planning in the Supply Chain_Pages 222-223; Exercises 1-2 (1; Parts a and b, and 2; Parts a and b)
• Total marks: 20; 5% of the final grade.
1-a) 5 marks
1-b) 5 marks
2-a) 5 marks
2-b) 5 marks
• Assignment questions should be answered in a Microsoft Word document and any Microsoft Excel spreadsheets used in the assignment should also be submitted along with the Word document. Your answer to the questions should include the optimization model used in the analysis of each question (and/or part) as well as the optimal solution.

1. Skycell, a major European cell phone manufacturer, is making production plans for the coming year. Skycell has worked with its customers (the service providers) to come up with forecasts of monthly requirements (in thousands of phones) as shown in Table 8-10. Manufacturing is primarily an assembly operation, and capacity is governed by the number of people on the production line. The plant operates for 20 days a month, eight hours each day. One person can assemble a phone every 10 minutes. Workers are paid 20 euros per hour and a 50 percent premium for overtime. The plant currently employs 1,250 workers. Component costs for each cell phone total 20 euros. Given the rapid decline in component and finished product prices, carrying inventory from one month to the next incurs a cost of 3 euros per phone per month. Skycell currently has a no-layoff policy in place. Overtime is limited to a maximum of 20 hours per month per employee. Assume that Skycell has a starting inventory of 50,000 units and wants to end the year with the same level of inventory.
a. Assuming no backlogs, no subcontracting, and no new hires, what is the optimum production schedule? What is the annual cost of this schedule?
b. Is there any value for management to negotiate an increase of allowed overtime per employee per month from 20 hours to 40?

2. Reconsider the Skycell data in Exercise 1. Assume that the plant has 1,250 employees and a no-layoff policy. Overtime is limited to 20 hours per employee per month. A third party has offered to produce cell phones as needed at a cost of $26 per unit (this includes component costs of $20 per unit).
a. What is the average per unit of in-house production (including inventory holding and overtime cost) if the third party is not used?
b. How should Skycell use the third party? How does your answer change if the third party offers a price of $25 per unit?

Group Assignment #2: Chapter 8
Chavaughn Blake, Bolaji Fawole, Madison Freeman, Jonalyn Saballa
March 4, 2021

Dr. Mehdi Jourabchi
MGT 3070- A
University of Lethbridge

Chapter 8: Aggregate Planning in the Supply Chain- Exercise 1-2
1. a.) Assuming that there are no backlogs, no subcontracting, and no new hires, the optimum production schedule is shown below. The annual cost of this schedule is therefore, € 360,400,000.

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